I spoke yesterday at the Net Zero Festival in London. I was asked to speak about how environmental campaigners could fight back against what the organisers called “net zero under siege.” But I don’t believe it is under siege. It’s just that the political landscape on the environment has changed, because of Rishi Sunak’s recent speech. But I am convinced Sunak made a big mistake, whatever his focus groups might be telling him, and that Labour should be confident in taking their differences on the issue and putting them centre stage in the coming election campaign.
Here is the full text.
Bill Clinton used to say he wished he had as much power as the member of a focus group in Detroit.
I wish I was as powerful as one of the few hundred voters in the Uxbridge by-election who decided at the last minute not to bother voting Labour.
Because I am pretty sure that result, Labour narrowly failing to win in a seat considered unwinnable by us even when Tony Blair was in his pomp, is what lies behind Rishi Sunak’s change of course on the environment.
As it happens, I think he has made a terrible mistake.
His big chance when he took over was not being Johnson and not being Truss. A low bar, yes, but he could so easily have said “I’m not as big a liar as him, and not as utterly useless as her. I am the change.” That was his opportunity. But was this really the change the country needed, or even that he really believes in?
My last book, on where politics has gone wrong, focused a lot on 3Ps. Populism. Polarisation. Post truth. To me, his environment speech was the moment he went to being a 3P leader.
His so-called “new approach to climate change” consisted of populist, post-truth promises to scrap policies that never existed – the nonsense about seven bins and meat tax and forced car sharing – bits of tinkering on electric vehicles, and backsliding on residential building emissions. Serious opinion and business reacted negatively.
Yet on he went to a party conference aimed at putting the climate where Brexit used to be, and immigration always seems to be … a so-called wedge issue, and the briefing ahead of the King’s Speech indicates he intends to keep on doubling down. That’s what polarisers do when they are seeking to divide and rule.
The speech was certainly a moment. And the reason is that it marked such a change from a broad consensus, that climate change was real, and that leaders, governments and indeed all of us would have to act to greater or lesser extents if we were to come through the crisis intact.
My definition of a crisis, as per a book I wrote some years ago, Winners and How They Succeed … an event or series of events which threatens to overwhelm you, unless the right decisions are taken.
The second part is as important as the first … there are always decisions that can be taken, to get us to a better place. And Sunak decided to signal a change of course.
Another quote from that book, from chess genius Garry Kasparov … only change your strategy if the fundamentals change. Did the fundamentals change? No – briefly, if those more recent by-elections are to go by, the political wind did, in a particular place and time. Leadership is about steering the ship through the winds, not being driven by them.
Where he has a point, of course, is that when major change is called for, in a democracy, you have to take people with you. And there is no doubt, after austerity, Brexit, Covid, the cost of living crisis, and now two major wars, that the possible costs and the trade-offs of the transition are perhaps more front of mind.
To be fair to Sunak, he was not alone in worrying that the balance was shifting. The problem was he defied and undermined credibility, by signalling a change in strategy, whilst insisting the overall objective could still be met. Not for the first time – did anyone mention Brexit? – politics trumped expertise and cold, hard reality.
And of course the usual political entrepreneurs are busy doing what populists do … see problems and challenges as things to be exploited, not dealt with. Farage … he barely talks about Brexit now, wonder why … more focused on his new enemy, Coutts bank, and his new cause, anti-net zero. Populist in Chief Trump is still closer to the climate hoax arguments than reality, and in what we often consider to be a more serious and mature political landscape, Germany, the hard right AFD are seeing a steady rise in the polls, and the government’s attempts to replace old gas boilers with heat pumps is one of the reasons, because the populists have exploited it ruthlessly.
So I don’t underestimate the political challenges in this debate. It has moved from science and theory, award winning films by Al Gore, the fame of Greta, COP summits, to a sharp end nitty gritty place that affects how we keep ourselves warm at home, what kind of car we drive and how much we pay for it, where we go for our summer holiday.
So we have started to see a dichotomy in polling on this issue. Overwhelming support for reaching the target of net zero in good time, but just over half, 53%, up for accepting some cost in the process, 40% saying no thank you, we would rather someone else paid.
The danger as I see it is that we risk learning the wrong lessons. Of course politicians and policy makers must take account of cost, especially when it may impact those who will be disproportionately affected, or who are struggling most now, and bear in mind they are in many cases likely to be one and the same.
But to go from one by election to an entire new political strategy which risks losing the UK its global leadership role at a time, post-Brexit, we need what influence we have more than ever is a classic example of doing the wrong thing at the wrong time and for the wrong reasons. Not just wrong, but politically not very clever.
[Here I asked for a show of hands on who the audience expected to be PM in 2025, offering three options … Sunak, Keir Starmer, or someone else. In an audience of several hundred, one hand was raised for Sunak, about four-fifths of the audience for Starmer, the rest for someone else]
So the expectation is a Labour government. At first I was rather troubled by Labour’s response on ULEZ after the Uxbridge by-election. I didn’t like the divisions caused by dumping on Sadiq Khan. I didn’t like that they had failed to land the fact that ULEZ was the brainchild of the man whose political demise for lying to Parliament was the reason for the by election in the first place. But then by Labour’s conference, infused by confidence from the shambles of the Tories’ gathering the week before, and the discipline and unity of his own, Keir Starmer showed a clearer and stronger pitch, full steam ahead. And if you read Ed Miliband’s recent speeches – I read several of them in preparation today, and several from the government – nobody can say Labour don’t have policy, plans, and political will on the issue. We need to hear more of it, so that the public know the full picture of what they propose.
So much of our politics in recent years has become so small. This scandal, that scandal. One personality spat to the next. But politics at its best is about big issues of fundamental significance, and they don’t come bigger and more fundamental than this. And part of what has been lost in recent years is the educative role of politicians, the framing of big and complex arguments, the setting out of choices, honestly, over time.
Chris Skidmore is a Tory MP, but should be commended and thanked for his work on net zero. His report was exactly the kind of thing I mean when I talk about that educative role, the framing of complex arguments, the setting out of choices. It is a tragedy that his work has largely been set aside by his government for naked and in my view misguided political reasons, and that he is leaving Parliament at the election.
The honesty is key. Whether you look at the Committee on Climate Change, the body that exists to keep the government’s feet to the fire and which the government is distancing itself from because it doesn’t like what it hears, or the Office for Budget Responsibility, on which Liz Truss did the same, with catastrophic effect, or the IMF … they are all united in the view that there will be costs in the short term. There often are in major change. There are many choices to be made en route, and there is nothing to be feared from debating them. Because alongside the debate on costs, there is a debate to be had on the long-term savings and earnings from change.
Of course the CCC figures are speculative and thanks to Michael Gove and Co, we live in a world where experts are to be viewed with suspicion not respect. But the CCC genuinely knows its stuff, and has the cost at 1.4trillion, the benefits at 1.1trillion, with possible fresh tax revenues from the net zero economy on top. Those figures set a context in which it is perfectly possible to take the country with you, no matter how much the political entrepreneurs will misrepresent en route.
I cannot claim to have all the answers to the “who pays?” question, but that government is in the lead, and partnership with science and enterprise central, is obvious. This is a national mission as part of an international necessity. I am glad it is one the five missions around which Keir Starmer is building his campaign, and the government to follow if he wins.
I hope we all agree that we cannot expect households already using food banks or cutting back on essentials to foot the bill. Nor is it realistic to talk about a costless supply-side green transition. The public is not daft. They know there has to be change. They know there is a price. They know there are opportunities too. People, especially after the horrors of all the gaslighting and dishonesty of recent years, are ready for a debate on that.
The other change we need is that when long-term goals and strategies are set, they are accompanied by implementation plans that are thought through and survive contact with reality. Brexit should have been the last big “back of the fag packet, make it up as you go along” policy. However, with the farce over the scrapping of chunks of HS2, and the unravelling of the projects Sunak announced as replacements, it would seem that getting rid of a populist like Johnson is easier than getting rid of populism.
This is where a return to serious politics and serious government is most urgent, and we have to demand that, and vote for that where we see it.
The chief complaint of business to Sunak’s recent shift was the lament for some stability, so that proper calculation can be made to give confidence to firms wanting to invest in carbon capture and green technology. Regulation is dull. Not the stuff to get people excited. But essential to make all this work. And if we are to get the supply side right, Labour needs to be ready with plans to update the regulatory framework and the emissions trading scheme.
“Rewire Britain”, part of Labour’s environmental mission, is the right thinking, but as the Germans found, moving people from gas to heat pumps can only be done if the supply chains are developed, and a workforce ready and trained to deliver it all. Labour is making a good deal of the need to change our approach to planning to get new homes built, but there are planning obstacles to tackle in this part of the transition too, not just in the supply of heat pumps but also in the extra demands on the grid.
And on the demand side, there is a lot that can be done using energy data to support innovation. I confess to getting a mild kick every time, since we had solar panels installed on our house, I take a look at the meter in the corner of our sitting room, the satisfaction matched by my anger with myself that we took so long to do it, given the savings we now make.
Perhaps especially in today’s age, where commitment to self sadly so often tends to trump commitment to others, let alone to something as grand and hard to grasp as “the future of the planet and humanity”, there has to be an element of answering the question “what’s in it for me?’ when taking the more sceptical members of the public with us.
If the focus is all on green taxes, or bans of this, that and the other, we are less likely to take the sceptical with us. We are talking an urgent need for change, yes, but one that will take time to implement and along the way, life for most will be broadly the same as it is now. Like a lot of historic change, the change will be felt most – and for the better – when it is implemented, and that requires government to lead, but to work in a spirit of co-operation with business and unions, with local authorities, with universities, with the people at the heart of the technological development. Change can be presented both as a good thing to do, and as something that will not break the bank of the individuals, businesses and families being taken on the road to that change.
In this context, the importance of America’s Inflation Reduction Act cannot be overstated – both for its impact on climate and its impact on changing the politics of Net Zero. The association of ‘green’ with ‘tax’ – which was always disastrous politics – is also bad policy.
Here is Credit Suisse analysis … The Inflation Reduction Act 2022 is the most ambitious and comprehensive legislative action the United States has ever taken on addressing climate change. Funding for innovation and R&D could position the US as a leader in the low-carbon economy in the 2030s and beyond. Quite a recommendation.
The only way to create consumer change rapidly and at scale is through making the green option cheaper, and it is happening. The green transition is making transport and electricity cheaper.
In the last decade alone public and private action has lowered the cost of wind energy by 60% and solar energy by 89%. Bloomberg estimates suggest they are 40percent cheaper than gas and the gap is widening.
It means for the UK, the costs of renewables are three times less than the cost of fossil fuels, and indeed in the peak of the Putin energy price crisis last summer, nine times less. Renewables cheaper than fossils – is that really a hard message to communicate, or grasp? I don’t think so.
So the drive to green energy is not just the right climate choice, or the right long-term economic choice, but the right choice now in face of the cost of living crisis.
Thanks to the IRA (the American one, let me be clear, not the old Irish one we used to have to deal with in government,) political assumptions are being turned on their head. Here is a story to gladden the heart of climate concerned progressives. Trumpian Texas now leads all other US States in wind and solar.
Also in the US, heat pumps are outselling gas boilers, because of government support. This form of state intervention more innovative than a punitive and complex carbon tax. The Americans are harnessing vast amounts of private capital, incentivised with subsidies, but even more powerfully by profitable loans and guarantees – which is transforming energy, transport and manufacturing – and they are neutering the games of the political entrepreneurs and populists by creating jobs and reducing bills.
So an ambitious industrial green policy (supported by investment) is an essnential cornerstone of a competitive economy going forward.
Why did the US act as it has? Because China was taking the lead. Why did the EU react in the way it has? Because of the US. Why is India stepping up? All of the above. Contrary to the lazy thinking in UK government about Biden’s IRA, whingeing that it is protectionist or greedy, it is precisely a modern green industrial policy at work. An active state deploying public investment to crowd in and catalyse private investment. Also, if the US takes a lead in the development of green hydrogen for example, and drives down its costs, it will benefit all, including the UK, and make the green transition more affordable. We should welcome US action and indeed subsidy to drive down those costs.
Accelerating investment in cheaper electricity is a positive supply shock which raises productivity and living standards in a direct and tangible way. The losers are not the general population or consumers, but the owners of existing polluting assets – who happen to be largely theocracies, thugogracies and the 1percent. There is no huge cost to the state because we end up with higher productivity and any liabilities incurred should have a corresponding, higher yielding, asset. This is what we call wealth-creation.
Oxford University’s Institute for New Economic Thinking has shown that previous research overestimated the future costs of clean energy technologies by underestimating the impact of learning curves. Sustainable and increasingly cheaper electricity should be the basis of a new Labour industrial policy – (that’s new Labour not New Labour) – because evidence from Oxford demonstrates that wind, solar and battery power are following a Moore’s law-like trajectory in cost decline and productivity improvement. The charts on this are a thing of beauty.
Fossil fuel could never deliver such benefits. The prices of fossil fuels such as coal, oil, and gas are volatile, but after adjusting for inflation, prices now are not far off what they were 140 years ago. By contrast, for several decades the costs of solar photovoltaics, wind and batteries have dropped exponentially.
So countries that transition faster to the technologies of the green economy will reap the benefits faster; lower cost of energy to consumers and businesses, and productivity benefits to the whole economy.
Making the green option cheaper – a lot cheaper – is the only way to make the transition work at the speed and scale we need. If green cars are cheaper, and if mortgages for well-insulated sustainable buildings are lower, who wouldn’t support the green transition? The fastest way to create this price differential is to accelerate investment in low carbon technologies across sectors: let the cost curve take effect.
As the American scientist and entrepreneur Doyne Farmer puts it, transitioning from a resource based energy system to a technology based system will collapse the cost of our energy systems and drive structural productivity growth. His summary: “we are in a race between armageddon and awesome.”
Now cars: the facts and figures related to the auto industry are remarkable, and insufficiently disseminated or understood. In the next 12-18months, Chinese car manufacturers are likely entering the European and UK market with much lower priced electric vehicle competitors to Internal Combustion Engines.
Exponential growth in electric vehicle sales is transforming the auto sector faster than currently predicted, with EVs set to dominate global car sales by the end of the decade, putting at risk nearly half of worldwide oil demand.
Look at Norway, which has made itself one of the richest countries in the world by using its oil money rather more wisely than we did. EV sales have reached 93percent of total car sales on the back of tax rebates driving upfront cost of EVs to be 5-10% cheaper than ICEs, and total cost of ownership up to 20% cheaper.
Later-adopting countries, such as India and Israel, are now accelerating EV deployment at faster rates than the global average, meaning they have a chance to catch up with the front-runners, such as China.
Leading markets have already crossed a tipping point, with the EU and China seeing battery electric vehicles cheaper to own than petrol and diesel cars in the small and medium-sized car segments. Battery electric vehicles are likely to cross a second tipping point, where their purchase price falls below that of an equivalent petrol or diesel car, as early as 2024 in Europe, 2025 in China, 2026 in the US, and 2027 in India.
And within 18 months it is likely that electric vehicles in the UK will be cheaper than their carbon-intensive competitors, even without subsidy. The main frustration is most likely to be an absence of a decent charging infrastructure due to a failure of – our old friend – government-led planning.
So if we are taking people with us, the mantra is this: green is cheaper, fairer, and raises our collective standards of living.
So if we are taking people with us, the mantra is this: green is cheaper, fairer, and raises our collective standards of living.
I’m sure many of you are aware of Corinne Sawers – co-author with economist Eric Lonergan, of Supercharge Me: net zero faster. She contacted me after Rory Stewart said on our podcast that we had harvested the low hanging fruit and now it was all about cost, which is what was making the politics so difficult. Corinne sent in a rather splendid rebuttal.
“The low-hanging fruit are far from fully harvested,” she insisted. “Due to global research and development and huge US and Chinese investment programmes – the fruit are likely to keep getting lower. Successful state intervention requires a predictable and stable regulatory framework, powerful financial incentives including loan guarantees, credit insurance, subsidies and co-investment. Although some interventions may require direct government subsidy e.g., home heating in the UK, they distract from the broader story and benefits to household and government finances of the green transition. America is showing that can happen.” Her book, by the way, is worth reading.
Sunak’s speech in September was also used – improperly as it happens given it was in a government building, but the old rules really do seem to have broken down – to launch the Tory Party’s new slogan … “Long-term decisions for a brighter future.” The thing about slogans is that they have to be matched by what you do, and in shifting gear on the climate, and then going cold on HS2, the last thing you could say was that he was focused on the long term.
Labour’s slogan was “Getting Britain’s Future Back.” Serious, honest debate on climate, underpinned by detailed policy work, is going to be key to doing that.
If I think back to our first election win in 1997. We promised a minimum wage. The Tories said it would cost a million jobs. Now the main parties fight to see who can offer the highest rate. We promised a New Deal for the young unemployed. The Tories said it would scare off business. Business was central to delivering it.
If Labour win, it will be because the public want change. If Labour set out their plans for change in that spirit of honest and open communication, not sugar-coating difficulties, but being clear how they can be met, there is no need to fear this debate. On the contrary, I would put it right at the heart of their campaign for power. Labour need to win big to be able to do big things. They will only win big if they promise the change, and only be able to deliver it if they get the mandate to do so.
At a political level, Labour should criticise the Tories – as the private sector has been doing – for creating a wildly uncertain regulatory and policy framework from the onshore wind sector, manufacturing, and the auto industry, and for failing to ensure that households benefited from much cheaper sustainable electricity. And they should pledge by way of contrast to work with the private sector to provide certainty, financial support, training and infrastructure to supercharge the transition to net zero while raising our living standards and reclaiming global leadership sadly lost by the charlatanism of Johnson, the idiocy of Truss, and the change of course by Sunak.
In short, this is not about messaging, but policy. And the right net zero policies, properly developed, explained and implemented, are a winning political strategy. Cheaper bills. Greater security from the Putins and petrostates. Good new jobs. If that doesn’t add up to a policy-based political strategy, I don’t know what does.
Sunak should remember this too: not long ago he and Johnson were both telling us that his predecessor would be around for a decade. But Johnson was Mr Brexit, which turned out to be a dud. He was Mr Covid and, as the inquiry is making horribly clear, he got that wrong too, with deadly consequences. Contrary to the propaganda at the time Sunak et al were trying to save him, he did not got the big calls right. He got them badly, badly wrong.
Perhaps I have forgotten everything I thought I ever knew about political strategy. But if I haven’t, then I remain convinced Sunak got this big call wrong too, and he will pay a heavy price.
Labour should make their green plans a big part of the campaign to come, because if they do win, putting them in place will be a big part of the growth agenda to which they are pledged. Mission 1 is Growth. Mission 2 is the environment. They are linked. Labour need to be out there loud and proud on this, and expose Sunak’s dreadful shift for the small politics error it truly is.